Note

10.

Commitments and Contingencies

Operating leases

Patriot has

seven

non-cancelable operating leases, including

four

Bank branch locations and

two

for administrative and operational space, and

one

equipment lease. The leases expire on various dates through

2032.

Most of the leases contain rent escalation provisions, as well as renewal options for

one

or more periods. The last potential year the leases can be extended through is

2032.

Certain leases require Patriot to reimburse the lessors for a proportion of property operating costs such as insurance and property taxes.

Future minimum rental commitments under the terms of these leases by year and in the aggregate, are as follows:

(In thousands)
Year ending December 31,	Amount
2019	$	396
2020		376
2021		378
2022		339
2023		315
thereafter		1,273

Total minimum payments required*	$	3,077

*Minimum payments have

not

been reduced by minimum sublease rentals of

$2.4

million due in the future under non-cancelable subleases.

Rent expense for operating leases is recognized in earnings on a straight-line basis over the base term of the respective lease and is included in the Statement of Income as a component of Occupancy and Equipment expense. For the years ended

December

31,

2018,

2017

and

2016,

total rent expense for cancellable and non-cancellable operating leases was

$593,000,

$953,000,

and

$1.1

million, respectively.

For the years ended

December

31,

2018,

2017

and

2016,

Patriot recognized gross rental income of

$413,000,

$399,000,

and

$414,000

offset by rental costs of

$5,000,

and

$5,000,

respectively.

Employment Agreements

The Company has a severance agreement for each of the Executive Vice Presidents that provides for severance equal to

months of current salary, if the EVP is terminated within

months of a change of control of Patriot.

Legal Matters

Patriot does

not

have any pending legal proceedings, other than ordinary routine litigation, incidental to its business, to which Patriot is a party or any of its property is subject. Management and Patriot’s legal counsel are of the opinion that the ultimate disposition of these routine legal matters will

not

have a material adverse effect on the consolidated financial condition, results of operations, or liquidity of Patriot.